Big-Bucks Ads: Advertise the Way the Big Players Do

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City.

It used to be that only humongous companies like Anheuser-Busch could afford to do an advertising blitz during a megaevent like the Super Bowl. Lately, small companies are sinking wads of cash into splashy, brief high-profile campaigns. The trend is conspicuously popular among Internet upstarts, which crave branding and are often well capitalized.

Take, for example, CDnow Inc., a Web-based music retailer that spent more than $1 million to air three spots during the February 1998 telecast of the Grammy Awards on CBS. This year it spent twice as much. Though it's tough to isolate the part advertising plays, the company, based in Fort Washington, Pa., has since seen explosive growth and now enjoys revenues of more than $56 million.

In January, HotJobs.com, an on-line jobs registry in New York City, spent $2 million--half its 1998 revenues--for one 30-second Super Bowl ad. CEO Richard Johnson says that at the time his competitors had better name recognition than his company did. "We were behind the curve in terms of ad dollars spent, so we felt that if we didn't do something dramatic, it would become harder and harder for us to brand ourselves," he says.

Johnson says the Super Bowl ploy worked. More than 800 newspapers and TV stations mentioned the company in pregame media hype. "At one point I had ABC World News Tonight on our 16th floor and NBC Nightly News on 14," Johnson brags. But new business carried an unanticipated cost. In the month after the Super Bowl spot aired, Hotjobs.com scrambled to accommodate a whopping 311% surge in Web traffic, spending $500,000 on new equipment to satisfy demand.

The real reason that small companies gamble on high-profile advertising is often simple PR. Consider the case of Gardenburger Inc., a maker of frozen veggie-burger patties out of Portland, Oreg. It spent $1.4 million on one 30-second ad during the final episode of Seinfeld--roughly 10% of its total advertising budget. "We thought long and hard about buying the spot," says president and CEO Lyle Hubbard. "We have to be very prudent with how we spend our ad dollars."

Gardenburger took the plunge largely because the show's May airdate coincided with the start of what Hubbard calls peak "grilling season." Also, Seinfeld's demographics dovetailed with Gardenburger's core market: women between the ages of 25 and 54. And running the ad garnered good publicity. NBC helped Gardenburger generate buzz by running laudatory full-page ads in Advertising Age touting the company's Seinfeld spot. In the week after the ad aired, the company had more than $2 million in sales--more than all its competitors together sold in the same week.